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Fuel firm predids
Page 12
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a joyless high five
Did you think the rise in fuel prices would be reversed? Forget it, says BP; we're facing at least five years of misery. Colin Barnett reports.
FUEL GIANT BP has warned that the crippling cost of diesel is more than just a temporary blip. It expects prices to remain high over the next five years as demand outstrips supply.
Production capacity was reduced about five years ago but producers failed to anticipate the current and impending restoration of demand.
Simultaneous recoveries of the US and Russian economies, together with unprecedented growth in demand from eastern Europe and China, mean that even with Saudi Arabia restoring its output to maximum level, there isn't going to be enough.
Steps are being taken to increase supplies but this will take five years to produce significant results.
The warning came at a BPCastrol presentation to promote its synthetic oils, which it claims offer a "significant" fuel saving. So far only 2% of UK trucks use synthetics. In Germany,where fuel consumption is much less of an issue, the figure is around 20%. BP-Castrol is also having trouble persuading truck manufacturers to use synthetics at first
fill, and persuading maintenance specialists to use them during services. This is because synthetics cost about five times more than conventional mineral oils but it's the operator who gets the benefit.
Operators aren't demanding synthetics either, according to BPCastrol, because they're put off by the higher cost without analysing the potential savings.